Wagering Agreement: Section 30 of the Indian Contract Act, 1872

It is a game of chance in which the chances of winning or losing are uncertain, as well as an event in which the chances of winning or losing rely on both sides. The danger of loss or the possibility of gain is not one-sided. The fundamental component of the wagering agreement is that neither party has any stake in the contract other than the amount that the individual is going to win or lose.

What is a Wagering Agreement?

The term "agreement" refers to a guarantee or responsibility guarantee that is established for gatherings under an agreement. A "wager" is an arrangement in which money is paid from one party to another based on the occurrence or non-occurrence of an unknown event. Now consider the following scenario. If a and b agree that A will pay 1000 RS to B if it rains today, this agreement may be considered a wager since if it does not rain today, b will be required to pay 1000 RS. And both A and B have the potential for profit or loss. Wagering agreements or wagers are agreements entered into between parties under the condition that cash is payable by the primary to the second party if a doubtful event occurs later and therefore by the second party to the primary party if the occasion does not occur. We shall define a wager as a bet in common man's language. Wagering contracts are generally void.

Likewise, wagering agreements or wagers are agreements entered into between parties under the condition that money is payable by the first party to the second party if a future uncertain event occurs and by the second party to the first party if the event does not occur.

Essential Conditions of Wagering

The terms of the wagering agreement are as follows −

• It must depend on an uncertain act: The agreement's subject matter must rely on an uncertain event. While a wager is normally about a future event, it can also be about an event that happened in the past, but the parties must be unaware of the outcome or the time when it happened.

• Mutual profit or loss possibility: An important component of a wagering agreement is that both parties have a probability of winning or losing based on an uncertain occurrence. If an agreement lacks the motivation to win or lose, it cannot be deemed a wagering agreement. It is critical that both parties have a stake in the outcome of an uncertain occurrence.

• Neither party has control over the event: If one of the parties has the ability to influence the result, the agreement will be missing an important component of a wager.

• Promise to remunerate: A promise to remunerate the other party is a necessary component of a wagering agreement.

A wagering agreement must have the following conditions −

• The parties hold opposing or polar views on the outcome of the uncertain event. (Carbolic Smoke Ball Co. v. Carlill)

• The parties have the opportunity to profit or lose according on the outcome of the event. (Diggle versus Hige)

• The parties' only concern is whether they win or lose. (LICI v. Brahma Dutt Sharma)

Exceptions

Insurance Contracts

An insurance contract is an indemnity contract created to protect one party's insurable interest against loss. A betting contract, on the other hand, is a conditional contract that has no interest in whether or not an event occurs.

Wagering contracts are void by definition, and the goal of a wagering contract is to earn money or money's worth.

Skill Competitions

Skill competitions are not considered wagering agreements since they require a high degree of skill to win and are not dependent on the likelihood of an uncertain outcome. Crossword puzzles, sporting events, and other such pursuits are examples. If the competition is dependent on chance or luck, such as in the lottery or a casino, it will be considered a wager and invalid.

Effects of Wagering Agreements

Wagering agreements have been specifically declared void in India. As a result, it cannot be enforced in a court of law.

In fact, while a wagering agreement is void and unenforceable, it is not prohibited by law. That is, the wagering contracts are null and void but not illegal. However, wagering agreements have been ruled illegal in the states of Gujarat and Maharashtra.

In terms of collateral transactions, the wagering agreements are void but not illegal, hence they are not void. As a result, they are legally binding. For example, if a person lends money to another person in order for him to pay off a gambling obligation, the lender can collect the money.

Conclusion

Wagering agreements are expressly declared void in India under Section 30 of the Contracts Act. As a result, it cannot be enforced in any court of law. Wagering agreements are null and void, and no suit shall be made to recover anything claimed to have been gained on any wager or entrusted to anyone to abide by the results of any game or other uncertain event on which any wager is formed.

A wagering agreement is invalid and unenforceable, but it is not illegal. However, wagering agreements have been ruled unlawful in the states of Gujarat and Maharashtra. In terms of collateral transactions, they are not invalid because the wagering agreements are void but not unlawful.

FAQs

Q1. What is Section 30 of the Contract Act of 1950?

Ans. Section 30 of the Contracts Act states that "agreements, the meaning of which is not certain or capable of being made certain, are void." "Void" here means legally unenforceable. An invalid offer will void a contract.

Q2. What are the exceptions to wagering agreements?

Ans. There are various exceptions to wagering agreements, such as insurance contracts, skill-based games, the stock market, and horse racing competitions. Wagering agreements are void but not illegal.

Q3. What is wagering agreement in Carlill v carbolic smoke ball?

Ans. "It is essential to a wagering contract that each party may win or lose under it, with whether he will win or lose being dependent on the outcome of the event and thus remaining uncertain until that issue is known," said Hawkins, J. (Carlill v. Carbolic Smoke Ball Co.).

Q4. Are wagers legally enforceable?

Ans. The wager cannot be legally forbidden. In general, it appears that a wager is legal and may be enforced in a court of law if it is not contrary to public policy, immoral, or tends to the disadvantage of the public in any other way.